Trump's Tariff Tantrum


Is Trump crazy like a fox- or just crazy? This two-year-old debate was revived again last Thursday with Trump’s decision to follow through on steel and aluminum tariffs against America’s closest allies including Canada, Mexico, and the European Union.  This potential overreach not only is an insult to our allies but also diminishes any chance to build a coalition against China, which in the Trumpian view is really the Dark Lord of international economics.   This is a big step for Trump, as the post-WWII coalition of the willing has built decades-long consensus that freer trade is a good thing. U.S. policy since then has largely focussed on bringing down global tariff barriers. A little-known fact is both imports and exports in the U.S. have since risen dramatically, resulting in a better quality of life, cheaper goods, and many new jobs in export-driven industries.  

The dirty secret is all countries have increased their prosperity collectively because of global trade. There are more union jobs in autos which will be hurt by Trump’s tariffs than those in steel and aluminum.  So while it’s unclear whether this is bad politics, it is surely bad economics. While one would hope this is a well-considered policy, it may just be a reaction to the bipartisan condemnation Trump received for extending ZTE a commutation of their death sentence.

Trump actually made the right decision with ZTE. You don’t close down the second largest tech company in China in an overnight press release without a public airing of their alleged offenses.  How would Americans feel if China could close down Hewlett Packard with a stroke of a pen? How would putting ZTE out of business help Trump slow down China’s urge to be more self-sufficient in technology in their 2025 plan? In fact, it would increase China’s desire- something neither Marco Rubio or Nancy Pelosi appear to understand.

With ZTE, Trump acted Presidential by changing his mind. Let’s hope he can stop his tariff tantrum here.